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Market sizing: market size of coffee (in gram)

Hey guys! Hope you all can help me out here.

I was wondering if I can estimate the market size of coffee this way:

1st source → coffee drinks :

1) break down the population:

- don't drink coffee at all (20%) = 0 cups / wk

- average joe (50%) = 5 cups / wk

- coffee lovers (30%) = 10 cups / wk

2) total # cups / 10 gr of coffee ground = total # of coffee ground

 

2nd source → other coffee-based products such as cakes, coffee-milk, coffee body scrub (this is getting popular in my country)

 

Is the framework okay? I assume that the amount of coffee drunk by people include the ones in their household, office, or cafes. Do I need to further break it down based on location? Also, do we need to narrow it down as much as we can e.g. based on their ability to afford the product or instant coffee vs premium coffee? I still find it hard to understand when to break it down as much as possible vs just consider it inclusive.

Moreover, for the 2nd source, any tips on how to approach it? I'm not sure how because I think I need to look at each product, but then will it be too complicated? Also, I'm sure that there are other coffee-based products that I may not include.

Any help will be much appreciated, thankyou so much!

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Pedro
Coach
am 4. Okt. 2021
Bain | EY-Parthenon | Senior Coach | Principal | Recruiting Team Leader

Two observations on your approach:

  1. If only 20% don't drink coffee, then everyone who is an adult is drinking coffee. This is not realistic.
  2. You approach the 2nd “source” the same way you do the 1st. Assume that the product has a certain quantity of coffee and then a frequency of consumption.

This is only volume, not market value. I doubt a case would focus on volume and not market value. For market value you would need to take into account different segments/price points, and this would be too simplistic for that.

Anonym A
am 4. Okt. 2021
Thanks for your answer! Do you mind clarifying point #1? Do you mind sharing how you would approach this? Thank you!
Pedro
Coach
am 4. Okt. 2021
Bain | EY-Parthenon | Senior Coach | Principal | Recruiting Team Leader
Probably would say that 20% of the population (1-18) don't drink coffee because of their age.
Then I would break down the remaining 80% as you did - 20%/50%/30%.
Anonym A
am 4. Okt. 2021
Thankyou Pedro for replying! Could you clarify this statement you mentioned before, "For market value you would need to take into account different segments/price points, and this would be too simplistic for that."?

So if the question is asking for market value, can I:
1) just multiply the % of different price points from the total # of cups? E.g. we get 1 mil cups of coffee. Then I would assume 60% for average price and 40% for premium price?
2) or better further narrow each % population segment based on the different price points: 50% average joe -> 30% drink premium coffee, and so on

Many thanks!
Pedro
Coach
am 4. Okt. 2021
Bain | EY-Parthenon | Senior Coach | Principal | Recruiting Team Leader
There are, as always, several approaches:
1) Consider the initial segments as also an indicator of willingness to pay for a coffe. It works, but it doesn't seem to be a realistic assumption. So would only use this approach as last resort
2) It would be more "elegant" to subdivide each segment into "mainstream" and "high value". So for example you would have 80% of average joes buying the "mainstream coffee" and 20% the "high value"; and then the "coffee lovers" with for example 40% vs. 60% percentage.
3) You could take the total coffee in volume and then think about where it is consumed. Probably 20% at home, 30% at regular coffee shops/restaurants, 10% at premium coffee shops and 40% at work, each one with a different price point. I find this one elegant because you show you can use different approaches to find a desired result.
Ian
Coach
bearbeitet am 5. Okt. 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

You've overly simplified the problem!

The entire point of market sizing is to break down the problem into segments that move you FROM guessing and TOWARDS estimating

Where'd you get average joes and coffee lovers? You made it up…that's not market sizing!

Rather, segment by things you do know (age, income, location) and referene yourself + other people around you. Leverage your observations of the world.

To be frank, you need a lot of work with your mindset shift in market sizing. This isn't going to be resolved by back-and-forth Q&A unfortunately. (You need to read up on the topic more, practice with others, and, if you can, get a coach to talk you through the thinking)

Take a look here for a Market Sizing answer I just gave for some more explanation of the mindset required: https://www.preplounge.com/en/consulting-forum/market-sizing-case-on-how-many-cactus-in-a-country-11725

bearbeitet am 30. Nov. 2021
Former BCG | Case author for efellows book | Experience in 6 consultancies (Stern Stewart, Capgemini, KPMG, VW Con., Hor